Theoretical Foundations of the Welfare State

Abstract

The term welfare defies clear-cut definition. Abstractly speaking, welfare may be defined as “the state of doing well especially in respect to good fortune, happiness, wellbeing, or prosperity” (Merriam-Webster, n.d.). Barr (2004) distinguishes between four different sources of individual welfare: Firstly, the labor market provides welfare in the form of wage income and occupational insurance schemes. Secondly, individual savings and private insurance contracts represent another source of welfare. Thirdly, individual welfare can also be derived through free or below-market-price services offered voluntarily by family members or others. Finally, the state also contributes to individual welfare in the form of cash benefits, benefits in kind, and subsidies (p. 6; Barr, 1992, pp. 742-743). Following Pierson’s (1998) schema, the first two categories are subsumed under economic welfare, the third category is defined as social welfare, and the fourth category falls under the rubric of state welfare (p. 6).